Koncept’s Porter analysis utilizes the five forces framework to determine the attractiveness of a market. Four forces - buyer power, supplier power, potential entrants, threat of substitution - influence a fifth force, the intensity of rivalry in the industry. The framework is a very powerful tool since a significant shift in any of the forces requires an organization to re-assess the marketplace.
The following five forces provide an outside-in analysis to evaluate the attractiveness of a market sector.
? Bargaining power of buyers - buyer concentration, buyer switching costs, buyer information availability, backward integration, price sensitivity
? Bargaining power of suppliers - Supplier switching costs, degree of differentiation of raw materials, presence of substitute raw materials, supplier concentration, forward integration
? Threat of new entrants - Existence of barriers to entry, brand equity, capital requirements, access to distribution channels
? Threat of substitute products - Buyer inclination to substitute products, relative price performance, switching costs, product differentiation
? Intensity of rivalry - Number of competitors, industry growth, state of market (fragmented or consolidated), diversity of competitors, brand equity
Koncept Analytics’ Porter Analysis is a frequently used business strategy tool and has proven its worth on several occasions.
Porter Analysis helps companies’ to perform a comprehensive analysis from the intensity of rivalry to the profitability and attractiveness of their industry. They use it to assess the external environment and devise strategize accordingly.
